Forward Rate Agreement and Interest Rate Guarantees

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  1. Avatar of htung00 htung00 says:
    October 21, 2012 at 8:39 am

    In the FRA agreement example the difference is setteled with the bank at the start of the loan and interest would be payble at the end.

    For loans with longer time periods the difference in timing might have a significant effect, would we have to take into account this when calculating the effective interest? Or is it unlikely to be asked of us in the exam?

    • Avatar of johnmoffat johnmoffat says:
      October 21, 2012 at 6:51 pm

      @htung00, That is usually the case (settle at the beginning and interest at the end) but it really depends on the agreement with the bank. It is unlikely to be relevant in the exam (it never has been!) but it would be good to mention it if you get the chance.

  2. Avatar of sheda100 sheda100 says:
    February 22, 2012 at 11:50 am

    Sir, pls can u explain why we didnot calculate IRG for the interest rate of 8%.

  3. Avatar of Saline Saline says:
    October 28, 2011 at 9:12 am

    Sir, you have told that you will tell the reason why to divide always by 400 when calculating premium. Can you please explain why to do so ?

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